Kleros- The Blockchain Dispute Resolution Layer

Human beings are part of day to day exchanges such as trading of goods, services in real life and that is also a part of the market place. So being satisfied or not, is also a part of the trade and business regardless of whether it is an exchange of goods or a service type. So in the business, not all the trades will be smooth and some disputes can happen and it is a natural outcome. As world is really vast and there are so many people and so many types of business people are dealing in daily life, it is also essential to put properly underlying terms to the business so that the trade can be done in a smoothest possible way. But that does not guarantee that it can satisfy the other party every time, as satisfaction is also a function of both perception. But the objective of putting proper underlying terms to a business is mainly to avoid any kind of dispute, as disputes have financial implications and also to some extent affect the reputation of a business. This way of doing business can minimize the dispute, but that can not completely eliminate disputes. So if disputes occur, then it should be resolved amicably.

So once a dispute arise, then the next part would be resolution and that is why we have the judiciary, where the disputes are resolved.

But are all the disputes resolved effectively in a time manner with the available judiciary system?

Do we have a legislation in place to cover all types of cases?

Is the judiciary system cost effective for small scale businesses for which the cost to appeal is more than the cost of the business itself?

The answer is NO.

So we need something to address these issues so that all the cases and all the types can also be resolved in a timely manner and cost effective manner.

In the age of blockchain technology and fast growing economy we must have a robust system in place to address the conflict in businesses. If the proper arbitrator can be chosen from the various fields of expertise and if their expertise skill can be utilized by levraging on smart contract and blockchain technology, then the dispute resolutions can be offered in a shortest possible time and at a lower cost too. That is what Kleros on the top Etherum Blockchain aims to deliver.

If the agreement between two parities establishes a clause of intervention of Kleros as an arbitrator, then in case of a dispute, both the parties can avoid a potential dispute or fraud and can save a lot of time and other resources.

Kleros

Kleros is a decentralized platform on the top of Etherum blockchain and it leverages on the blockchain technology, smart contract, crowd sourcing and game theory. It has a network of jurors who have got expertise in their respective field. The arbitration process is structured in such a way that these jurors are anonymous actors in the arbitration process, so that fair trial to the dispute is ensured.

By leveraging on Smart Contract, Kleros can be authorized to escrow the disputed fund until a resolution is made. The incentive system in Kleros is also designed to ensure trustworthiness of the jurors, so that the system can not be tricked and fair judgement can be delivered to the right party.

So in a nutshell, Kleros aims to offer fair & transparent arbitration process in dispute resolution and also it has various protective mechanism in place to prevent manipulation of the judgement process.

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How does Kleros work in dispute resolution

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Smart Contract

When the two party under consideration are in an agreement to integrate Kleros in order to avoid potential fraud, they have to define the details in the smart contract, so that at a time of dispute resolution, those details will be the logic to resolve the case after verification by the jurors.

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Kleros under the General Court, has many sub-court and these are also called as sub category. These categories are relevant to the respective field of businesses. In the contract, the number of jurors, the category(sub-court) and the outcome has to be selected. The most relevant category will help in proper dispute resolution(in case of dispute), as that sub-court redirect it to relevant individual of expertise.

In case of a dispute, the outcomes are presented upon the jurors and the choices are then stipulated by the contracting parties.

Fees

The arbitration also involves a fees which is paid by the participating parties and in general it is the service fee of the jurorr who resolve the dispute through Kleros. Depending upon the sub-category, the fees of the jurorr can vary and the Appeal fees is equal to the number of jurors multiplied fee per juror.

The fees in the General Court of Kleros can be formulated in ways such as either both the party agree to pay the fees of the court. In that case the winning party is reimbursed with the fees paid earlier.

It can also be formulated such as either the appealing or the disputing party pay the fees.

Selection of jurors

Based on the classification of expertise in relevant field, a person can apply as a s a juror in the relevant sub-court of the Kleros General Court. The system of Kleros is structured in a way that, when there is a dispute case, the jurors are selected randomly and the selection of jurorsw is also dependent upon the number of Pinakion(PNK) token staked by the juror. That implies, more number of tokens one has in stake, more is the chance of getting selected as juror, but that is also a subject of expertise in the field under consideration and it s a random call too in order to ensure impartial judgement.

Once the juries are selected, they are given access to the evidences to analyze and evaluate the outcome. Then the outcomes are voted by the jurors anonymously.

Incentive system

The juror system in Kleros is structured in order to bring a fair dispute resolution. For that system is incentivized in such a way that, the honesty of the juror can be ensured. So after the dispute resolution process, the the coherent jurors with the group will earn some tokens where as incoherent jurors will lose some token. The idea is to deduce good jurors from the bad ones.

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For example, if there are 6 jurors in a group and there two outcomes "Yes" or "No". Out of 6, suppose 4 voted in favor of "Yes" and 2 voted in favor of "No", then the outcome "Yes" wins and in such a case 2 jurors out of 6 are considered as incoherent jurors and the other 4 jurors out of 6 are are considered as coherent jurors.

Enforcement

The final judgement is then presented upon and the escrowed fund is then released to the rightful party. However if the judgment is not satisfactory for the other party, he is allowed to re-appeal again.

The re-appeal can be done multiple times, as long as the re-appealing party is ready to bear the expenses of the dispute, and the re-appeal to each appeal will have twice as many number of jurors of the previous dispute plus one to arrive at a better solution which can satisfy all the parties.

Benefits of Kleros

• Small industries like stationary vendor, Amazon and eBay dealers, online entrepreneurs, gaming sites, e-commerce sites etc can greatly benefit by integrating with Kleros arbitration protocol and can save lot of resources like time, money, etc.

• The individuals who have got expertise in specific field, can voluntarily apply as juror and they can be randomly selected in case there is a dispute related to their specific field of expertise. Indirectly it is creating an ecosystem where the individuals can also earn a living by leveraging on their experience and expertise.

• Kleros ensures fairness in the judgement process by anonymous selection of jurors.

• The arbitration process is robust and can not be tricked. The random selection & anonymous process ensures that.

• The re-appeal facility can also be used by either party.

• By integrating Kleros protocol, either party can have much better confidence while delivering their business online.

• The incentive mechanism ensures good jurorr are placed in the arbitration process as the coherent behavior in the group of juries is evaluated as the end of the arbitration process. The coherent jurors also earns tokens.

• As the e-commerce sites do a lot of deal internationally across the globe, Kleros arbitration solution can be most effective to ensure fraud-free business online.

Kleros Vs Traditional judiciary

Traditional judiciary

Traditional judiciary system, can not cover all the specific field in the region and across the globe. It is not practically possible also. They are also limited in the number of expertise or in some cases no expertise at all to some specific cases. Further it is time consuming and too much costly if the dispute related to a particular case is of very small amount and in those cases the party consider it as a loss and don't generally go with a dispute resolution. The small and medium scale industries can not afford to go for a dispute resolution for their case through traditional judiciary system, as the cost to appeal & other indirect costs involved in resolve of a dispute is more than what their case is.

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Kleros

A decentralized arbitration solution like Kleros can straightaway benefit small scale businesses and enterprises. The small scale enterprises always deal with small scale of turnover and for those whose worth of business is as little as 200 usd, 500 usd or 1000 usd can find it affordable and cost effective for them, should a dispute arise in their business discourse. It can also save a lot of time as one does not have to schedule for travel to attend the trial in the conventional judiciary system. It is done online and that can further be easy for individuals and businesses. The large scale businesses and corporate can also benefit by leveraging on the dispute resolution of Kleros as they face various types of disputes and handling them altogether is not an easy task. Kleros sub-court categorically redirect the dispute cases to the jurors who are expertise in their field.

PNK Token

It is the native token of Kleros and to use the Kleros arbtration protocol, it is required to stake PNK token. So staking before a dispute resolution process and rewarding the jurors with PNK token after the completion of arbitration process happen through PNK tokens. So PNK token performs two key function in the Kleros deisgn of arbitration. The first one is to protect the system and the second one is to provide incentives to the coherent jurors in the group.

My thoughts

We are in a transition process from centralized system to a decentralized system. The businesses are slowly moving towards decentralized economy. As more and more players will come, it will further bring many types of disputes in the decentralized market place and economy. Kleros being a decentralized arbitration protocol, can provide the best dispute resolution process to all such businesses. The small traders, e-commerce, social media dealer can greatly benefit from Kleros to avoid any kind of potential fraud. That can also boost confidence in maintaining a robust business environment and also have the potential to boost the economy in an indirect way. In my thoughts, Kleros is first of a kind of arbitration solution especially for small enterprises and individual e-commerce traders.

Conclusion

Both globalization and decentralization can not be over dependent on the traditional judiciary system and it is practically not feasible to handle such a large scale of issues and cases and further with very micro & specific field of expertise. Therefore the solution must essentially be a decentralized solution like Kleros. The rapid changes in the business standard and with various new markets evolving each day, it is an essential part to address the dispute resolution process particularly for the people who deal online businesses every day. It can solve the other types of businesses also, but the growing numbers of online businesses definitely demand a solution like Kleros. The start ups, individual entrepreneur, small enterprises, e-commerce sites can have great confidence if they will integrate with Kleros so that, at a time of dispute, they can resolve the dispute amicably with Kleros. Kleros can definitely address a variety of categories in dispute resolution.

Rating 5/5

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More Information & Resources

Kleros Website

Kleros WhitePaper

Kleros Github